FXStreet (Guatemala) – Valeria Bednarik, chief analyst at FXStreet explained and noted that the dollar cached a bid and soared to a fresh 7-month high against the common currency in the American afternoon, posting 1.0550 before bouncing back.
Key Quotes:
“Ever since the day started, the macroeconomic picture kept the pair under pressure, as poor inflation results in the EU for November boosted the case for further ECB easing this Thursday. According to the official release, inflation in the region rose by 0.1% compared to the previous month, and 0.9% yearly basis, missing expectations and indicating deflationary pressures remain intact. In the US, the ADP survey showed that the private sector added 217K new jobs during November, anticipating a strong NFP report for the same month, whilst the unit labor cost surged to 1.8%. The start of the day was, however, the FED’s chair, Janet Yellen, who spoke late in the US and affirmed that the economic and financial info has been consistent with their expectations of continued improvement, pretty much guaranteeing a rate hike this December. But at the same time she expressed concerns over long term inflation and added that “after the initial increase in the federal fund rate, monetary policy will remain accommodative.”
The EUR/USD pair bounced from the mentioned low, and recovered up to the 1.0600 region, albeit its having a hard time to remain above it ahead of the US close.
The pair has been trading in quite a limited range ever since the week started, ahead of the upcoming major events, and the technical picture is neutral-to-bearish, as the 4 hours chart shows that the price is struggling around a horizontal 20 SMA, while the technical indicators are seeking for direction around their mid-lines.
A break below 1.0550, with additional easing coming from the ECB, can open doors for a retest of the year low at 1.0460 this Thursday, with chances of fresh lows afterwards, should US employment data beat expectations.”
(Market News Provided by FXstreet)